Chile corrects exchange ratio from previous exchange offer announcement

Chile issued a correction to the terms of the results of its exchange offer, specifically as related to the exchange ratios and pricing terms for the 2025 notes. This also changed the aggregate total of notes exchanged. A corrected version of the story is below.

By William Gullotti

Buffalo, N.Y., July 8 – The Republic of Chile detailed the results of its 10 concurrent exchange offers covering $6.48 billion aggregate principal amount from six series of dollar-denominated notes and €4.95 billion aggregate principal amount across another four euro-denominated series of notes, according a press release on Friday.

Dollar-denominated offer

The republic invited holders on June 27 to tender their dollar-denominated notes in exchange for 2036 notes or 2054 notes. The additional 2036 notes and 2054 notes, priced Thursday, will be consolidated and form a single series with Chile’s newly priced $1.15 billion 4.95% notes due 2036 and $1.1 billion 5.33% notes due 2054.

Holders tendered an aggregate principal amount of $971,373,000 for exchange under the combined dollar-denominated offers, with $661,199,000 tendered by group A and $310,174,000 tendered by group B.

The group A results broke down with holders from

• The $318,728,000 outstanding 3 1/8% notes due 2025 (Cusip: 168863BW7) tendering $48,018,000 to exchange for 2036 notes and $5,878,000 for 2054 notes, leaving $264,832,000 of the original issue outstanding;

• The $709,316,000 outstanding 3 1/8% notes due 2026 (Cusip: 168863CA4) tendering $105,149,000 to exchange for 2036 notes and $3,379,000 for 2054 notes, leaving $600,788,000 outstanding;

• The $2 billion outstanding 3.24% notes due 2028 (Cusip: 168863CF3) tendering $132,930,000 to exchange for 2036 notes and $73,379,000 for 2054 notes, leaving $1,793,691,000 outstanding; and

• The $1,758,000,000 outstanding 2.45% notes due 2031 (Cusip: 168863DP0) tendering $242,446,000 to exchange for 2036 notes and $50.02 million for 2054 notes, leaving $1,465,534,000 outstanding.

Tenders from group B resulted in

• $77,558,000 of the $407.62 million outstanding 3 5/8% notes due 2042 (Cusip: 168863BP2) tendered for exchange, leaving $330,062,000 outstanding; and

• $232,616,000 of the $1,284,412,000 outstanding 3.86% notes due 2047 (Cusip: 168863CE6) tendered for exchange, leaving $1,051,796,000 outstanding.

An aggregate total of $499,852,623 (modified) additional 2036 notes and $381,658,578 (modified) additional 2054 notes will be issued as a result.

Pricing for dollar offer

The new notes were reopened, as previously reported with Thursday’s pricing, with the following considerations per $1,000 principal amount:

• $971.26 for the 2036 notes, based on a spread of 123 basis points over the 3 3/8% U.S. Treasury due May 15, 2033 to yield 5.267%; and

• $978.75 for the 2054 notes, based on a spread of 148 bps over the 3 5/8% U.S. Treasury due Feb. 15, 2036 to yield 5.474%.

As previously reported, the group A exchange offers were priced per $1,000 principal amount as follows:

• The 3 1/8% notes due 2025 were priced based on the 4Ό% U.S. Treasury due May 31, 2025 without a spread for an exchange price of $976.21, reflecting a 1.004217 exchange ratio for the 2036 notes and a 0.996458 ratio for the 2054 notes (the corrected figures);

• The 3 1/8% notes due 2026 were priced based on the 4 1/8% U.S. Treasury due June 15, 2026 and a spread of 20 bps for an exchange price of $957.12, reflecting a 0.999733 exchange ratio for the 2036 notes and a 0.992008 ratio for the 2054 notes;

• The 3.24% notes due 2028 were priced based on the 3 5/8% U.S. Treasury due May 31, 2028 and a spread of 50 bps for an exchange price of $933.25, reflecting a 0.974358 ratio for the 2036 notes and a 0.96683 ratio for the 2054 notes; and

• The 2.45% notes due 2031 were priced based on the 3 3/8% U.S. Treasury due May 15, 2033 and a spread of 65 bps for an exchange price of $859.11, reflecting a 0.895003 ratio for the 2036 notes and a 0.888088 ratio for the 2054 notes.

The offers for the group B notes priced as follows:

• The 3 5/8% notes due 2042 were priced based on the 3 7/8% U.S. Treasury due May 15, 2043 and a spread of 110 bps for an exchange price of $796.89 and an exchange ratio of 0.820727; and

• The 3.86% notes due 2047 were priced based on the 3 5/8% U.S. Treasury due Feb. 15, 2053 and a spread of 125 bps for an exchange price of $812.48 and an exchange ratio of 0.831535.

As previously reported, the exchange ratio accounted for accrued interest.

Euro-denominated offer

Chile offered holders from four series of euro-denominated notes to exchange for additional 4 1/8% notes due 2034, likewise repricing the reopened notes per €1,000 principal amount to calculate the exchange ratio for their notes, for a similar exchange at a spread of 128 bps over an interpolated mid-swap rate to yield 4.527% at a reopening price of €965.79.

Participating holders tendered an aggregate total of €448,194,000 in the offer.

An aggregate total of €425,688,963 new notes will be issued as a result.

Holders under the euro-denominated exchange offers, with considerations based per €1,000 principal amount, tendered:

• €58,092,000 of the €1,641,550,000 outstanding 1 5/8% notes due Jan. 30, 2025 (ISIN: XS1151586945), leaving €1,583,458,000 outstanding, at an exchange price of €970.75 and an exchange ratio of 1.011825 as priced using an interpolated mid-swap rate minus a spread of 45 bps;

• €134.49 million of the €1,109,770,000 outstanding 1Ύ% notes due Jan. 20, 2026 (ISIN: XS1346652891), leaving €975.28 million outstanding, at an exchange price of €959.68 and an exchange ratio of 0.992861 as priced using an interpolated mid-swap rate minus a spread of 5 bps;

• €38,406,000 of the €709,103,000 outstanding 1.44% notes due Feb. 1, 2029 (ISIN: XS1760409042), leaving €670,697,000 outstanding, at an exchange price of €883.71 and an exchange ratio of 0.914265 as priced using an interpolated mid-swap rate plus a 55 bps spread; and

• €217,206,000 of the €1,490,756,000 outstanding 1 7/8% notes due May 27, 2030 (ISIN: XS1236685613), leaving €1,273,550,000 outstanding, at an exchange price of €882.30 and an exchange ratio of 0.912806 as priced using an interpolated mid-swap rate plus a 60 bps spread.

As previously reported, accrued interest was accounted for in the exchange ratio.

Additional details

All notes tendered for exchange were accepted without proration.

Settlement for the exchange offers remains slated for July 12.

Global Bondholder Services Corp. is the information and depositary agent for the offers (212 430-3774, 855 654-2015, contact@gbsc-usa.com).

The dealer managers for the dollar-denominated invitation are Credit Agricole Securities (USA) Inc. (us.liabilitymanagement@ca-cib.com; 866 807-6030), HSBC Securities (USA) Inc. (888 HSBC-4LM, 212 525-5552; liability.management@hsbcib.com), Santander US Capital Markets LLC (USDCMLM@santander.us; 212 940-1442), Scotia Capital (USA) Inc. (LM@scotiabank.com; 833 498-1660) and SG Americas Securities, LLC (liability.management@sgcib.com; 855 851-2108).

The dealer managers for the euro-denominated exchange offer are Credit Agricole CIB (Liability.Management@ca-cib.com, us.liabilitymanagement@ca-cib.com), HSBC Securities (USA) Inc. (888 HSBC-4LM, 212 525-5552, liability.management@hsbcib.com), Banco Santander, SA (LiabilityManagement@gruposantander.com), Bank of Nova Scotia, London Branch (833 498-1660, LM@scotiabank.com) and Societe Generale (+33 1 42 13 32 16, liability.management@sgcib.com).

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